Aladdin and the Magic Lamp
- Pleading for a new culture of "free market"

When we speak of a new economics theory, we
think primarily about the need to develop a theoretical framework which
keeps us in step with the present realities and prepares us for the future
trends.

I think it is equally important to evaluate
the past, to identify good things we lost along the way, things that ensured
progress and civilization. The current economic crisis is not a result of
technological progress, resources depletion, globalization or population
growth, it is the result of losing the moral foundation on which economic
development built on. In other words, it is not a financial crisis, but a
profound moral crisis, where money transforms from means of business to
meaning of business, where honest competition is replaced by speculation,
where the greed and arrogance of corporations, the establishment, and the
private media created a toxic triangle.

When a civilization is reaching the stage of
decadence, its salvation might be to return to its traditions, to science
and culture and even to myths that tell us what we don’t know or have
forgotten about ourselves.

Oriental imaginary which for centuries
fascinated the Western World, has given us through Aladdin and the Magic
Lamp a parable of the eternal search for material good (wealth) and
spiritual good (love). The story of the poor youngster, who sees his desires
fulfilled by a magician, then loses everything and in the end triumphs,
recovering the palace and the princess, enchanted my childhood. It has a
deeper meaning: success not built on own efforts is followed by the crisis
of losing everything; the whole process though brings Aladdin in a higher
spiritual place, giving him the strength and integrity that will ultimately
make him succeed through personal merit. Beyond the metaphor of the magical
powers of the master which have the meaning of knowledge, the metaphor of
the journey meant as a study and the metaphor of the cave meaning tenebrous
ignorance, we discover the role of knowledge: without it we can lose
everything, on the other hand, once assimilated, knowledge helps us become
our own master.

Economy and democracy are but two ways in
which people have pursued for two millennia the tradeoff between the common
good and individual interest. Both are challenging enterprises, where
success is often accompanied by setbacks.

In the mid 20th century, Austrian economist
and philosopher Friedrich August von Hayek proclaimed the inseparable
trinity of civilization: legality, liberty, and private property. He argued
that only their presence together in a society guaranties a good
relationship between democracy and market economy.

A healthy democracy can not exist without a
vibrant middle class. The existence of a critical mass of independent
citizens, able to support themselves and willing to devote some of their
energy to public affairs, is today as it was in the time of Pericle’s
democracy, a condition for any form of participative governance. However,
this may not be sufficient for the survival of the democracy, is only a
necessary precondition for a democratic government.

Tragic experience of Germany in the 3rd
decade of the last century, showed that the collapse of the middle class,
after sanctions were imposed following the Reich’s defeat in World War I,
put the German people in a position to choose between two suicidal
alternatives: fascism or communism.

Closer in time, the experience of former
communist dictatorships in Central and South Eastern Europe regarding the
relationship between democracy and economy in the post-communist transition
has not only local resonance, but it is of general interest because it shows
that only the private property gives one’s measure for self value and
protects one’s right to desagree with measures that harm individual
interests.

On a larger scale, a free global economy can
be regarded as a guarantor of world peace because it keeps in check the
tendency of political leaders to promote aggressive nationalism, as long as
the war would harm the business interests of their nations. At this point,
the theory of "invisible hand" of Adam Smith approaches Hegel’s “cunning of
reason” theory. Universal reason uses the selfish drive of political leaders
to achieve progress in world history.

I am not a supporter of conspiracy theories.
On the contrary, I believe that many of these theories are launched by
people with limited understanding of the complexity of the phenomena,
targeting an audience with the same inability to judge all aspects of life.
However, I can not help noticing that the last global financial crisis,
which began in 2007, was the result of several arrangements and
collaborations, which led to collusive or fraudulent gains to the detriment
of the economy and of citizens.

An unregulated market economy led by aim of
economic growth as a target in itself, not as a consequence of a competitive
process, leads to funding operations that are increasingly speculative and
risky, misleading everyone outside the conspiration. A game is created where
banks escape accountability, bribe rating agencies and government, entering
into collusion with politicians to mask the lack of healthy economic
foundation and tempting investment funds, followed by pension funds and
insurance companies to join in, targeting greater profits and masking
growing risks.

Western developed economies paraded their
welfare and their technological superiority to the rest of the world to sell
their recipe for success. After 2007 collapse, it is time for concern in the
Western World to find a new economic model. Suggestions that appear in the
new economic theories, however, are often detached from human nature and
short-sighted. Their recommendations for a new global approach betray a
superiority complex and are too utopian, with little chance of success
beyond the conference halls or university auditoriums.

I can not help wondering what is meant by the
phrase rational and equitable world order, so often present in the language
of contemporary international bodies. If it means imposing a single model of
good, then we should remember the world has been shaken by devastating wars
and bloody revolutions, all conducted on behalf of the common good, which
should prompt us to prudence. I suppose the proclaimed triumph of global
democracy and market economy at the end of the Cold War can not be
interpreted as an end of evolution, the installation of mankind in an era in
which no value can be new, no new ideas can apear. On the contrary, at the
beginning of the century and millennium we should be confident in our
freedom to invent ingenious and creative new ways and means for developing
the identity of each of us.

In my opinion, there are two major obstacles
to the effectiveness of a new economic theory: first, ignoring the toxic
triangle I mentioned at the beginning of my speech; second, formulating
utopian goals for the new vision.

For the first obstacle we must find practical
ways to overcome the corporate resistance to losing their speculative
profits, fight the government inefficiency and corruption and stop media
fixation on trivial topics that favor profits rather than hosting serious
debates.

For the second obstacle, I believe we should
scrutinize ourselves in the mirror, and accept that the esential concept for
a new business ethics is social responsibility. Conceptual modeling of
economic relations is at its beginnings and it must be permanently bound in
the context of a modern and technologically advanced society to moral
doctrines and basic human nature.

We are summoned to answer the question: What
is correct / right / ethical / moral in the economic environment?